Inayat Roadlines & Co., Kolhapur V. Dy. CIT Cir. 2, Kolhapur, Kolhapur

ITA 516/PUN/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3195 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 09-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R KAUSHAL
• Keywords: TDS; Set aside
• Section: 143(3); 40(a)(ia); 194C; 143(1); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH : A , PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI D. K. SRIVASTAVA, AM I.T.A. NO. 516/PN/2010 : A.Y. 2005-06 INAYAT ROADLINES AND CO. 719 E, 3 RD LANE SHAHUPURI, KOLHAUR PAN AAAF1309 C APPELLANT VS. DY. CIT CIR. 2, KOLHAPUR RESPONDENT APPELLANT BY : SHRI M.K. KULKARNI DEPARTMENT BY : SHRI R. KAUSHAL ORDER PER SHAILENDRA KUMAR YADAV THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT DATED 29-3-2010 PASSED UNDER SECTI ON 263(1) OF THE ACT ON THE GROUND THAT THE CIT WAS NOT JUSTI FIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT A ND SETTING ASIDE THE ASSESSMENT. 2. THE ASSESSEE-PARTNERSHIP FIRM IS ENGAGED IN THE BUSINESS OF TRANSPORTATION AND IS ALSO A COMMISSION AGENT. THE ASSESSEE HAS FILED A RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 31-10-2005 DECLARING TOTAL INCOME AT RS. 13,45,180/- WHICH WAS PROCESSED U/S 143(1) ON 8-3-2 006. ITA NO.516/PN/10 INAYAT ROADLINES & CO. A.Y. 2005-06 2 SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AN D THE ASSESSMENT WAS COMPLETED U/S 143(3) DETERMINING THE TOTAL INCOME AT RS. 25,29,340/- BY MAKING AN ADDITION OF RS. 11,89,556/- ON VARIOUS ISSUES. 3. ON VERIFICATION OF THE RECORDS, THE CIT NOTICED THAT THE ASSESSEE HAS MADE PAYMENTS OF RS. 2,54,63,055/- TO THE OUTSIDE TRUCK OWNERS WITHOUT DEDUCTING TDS ON THE S AID PAYMENTS AS PER THE PROVISIONS OF SECTION 40(A)(IA) R.W.S. 194C OF THE ACT. THE CIT OBSERVED THAT CONSIDERING THE NATURE OF BUSINESS AND VOLUME OF TRANSACTION INVOLVED, THE A. O WAS DUTY BOUND TO SCRUTINIZE THE PAYMENTS MADE TO INDIVIDUAL TRUCK OWNERS AND TO VERIFY THE APPLICABILITY OF THE SAID PROVISIONS IN THE ASSESSEES CASE AND MAKE NECESSARY DISALLOWANCE S, IF ANY. HOWEVER, SUCH INDIVIDUAL VERIFICATION OF THE PARTIE S CONCERNED, WAS REMAINED TO BE DONE BY THE A.O WHILE PASSING OR DER U/S 143(3) OF THE ACT. THEREFORE, THE CIT HELD THAT THE ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE. UNDER THESE CIRCUMSTANCES, THE CIT PRO CEEDED TO INVOKE THE PROVISIONS U/S 263 OF THE ACT. AFTER TA KING INTO CONSIDERATION THE SUBMISSIONS PUT FORWARD BY THE AS SESSEE, THE CIT SET ASIDE THE ASSESSMENT ORDER BY OBSERVING AS UNDER: IN THE CIRCUMSTANCES, I FIND THAT THE ORDER OF THE A.O IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE, INASMUCH AS ALL MATERIAL FACTS RELATING TO THE VERI FICATION OF THE APPLICABILITY, OR OTHERWISE, OF THE PROVISIO NS OF ITA NO.516/PN/10 INAYAT ROADLINES & CO. A.Y. 2005-06 3 SECTION 40(A)(IA) R.W.S. 194C OF THE ACT HAVE NOT B EEN PROPERLY VERIFIED. THE OBJECTIONS RAISED BY THE AS SESSEE AGAINST THE PROCEEDINGS U/S 263 ARE ACCORDINGLY DISMISSED. THE A.O IS THEREFORE, DIRECTED TO RE-EXAMINE THE EN TIRE ISSUE OF CLAIM OF RS. 25,46,055/- UNDER THE HEAD PAYMENT ON ACCOUNT TO OUTSIDE TRUCKS IN LIGHT OF PROVISIONS OF SECTION 40(A)(IA) R.W.S. 194C OF THE ACT AND RE-DETERMINE THE SAME AS PER LAW AND PASS NECESSARY ORDERS. THE ASSESSMENT ORDER DATED 20-12-2005 IS THEREFORE, SET ASIDE WITH A DIRECTION TO MAKE IT AF RESH, AFTER GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO FURNISH ITS SAY IN THE MATTER. 4. THE ASSESSEE IS AGGRIEVED BY THE AFORESAID DECIS ION OF THE CIT ON THE GROUND THAT THE CIT WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT AND SETTI NG ASIDE THE ASSESSMENT. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. WE FIND THAT THE ISSUE WITH RESPECT TO I NVOCATION OF PROVISIONS OF SECTION 40(A)(IA) HAS COME UP FOR CON SIDERATION BEFORE THIS BENCH OF THE TRIBUNAL IN THE CASE OF MR S. SHAH CHARULATA MILIND IN ITA NO. 1318/PN/2008 FOR A.. 20 05-06 WHEREIN VIDE ITS ORDER DATED 31-5-2010 THE TRIBUNAL DECIDED THE ISSUE AS UNDER: AT THE OUTSET OF HEARING LD. AR POINTED OUT THAT T HIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF ITAT JAIPUR A BENCH I THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LTD. VS. DCIT (2009) 123 TTJ 888, WHEREIN ASSESSEE, AN ELECTRICITY DISTRIBUTION COMPANY WAS NOT LIABLE TO DEDUCT TAX AT SOURCE UNDER SEC. 194J FROM THE PAYMENT OF TRANSMISSION/SLDC CHARGES TO THE TRANSMISSION COMPANY RVPN AS THE OPERATION AND MAINTENANCE OF TRANSMISSION LINES BY RVPN AND THE USER OF THESE LI NES ITA NO.516/PN/10 INAYAT ROADLINES & CO. A.Y. 2005-06 4 BY THE ASSESSEE FOR TRANSMITTING ENERGY DOES NOT RE SULT IN ANY TECHNICAL SERVICES BEING RENDERED TO THE ASSESS EE, APART FROM THE FACT THAT PAYMENT OF TRANSMISSION/WHEELING/SLDC CHARGES IS REIMBURSEMENT OF THE COST AND, THEREFORE, THE PAYMENTS COULD NOT BE DISALLOWED U/S 40(A)(IA) ARE NOT APPLICABLE ALSO FO R THE REASON THAT THEY APPLY ONLY WHEN THE AMOUNT IS PAYA BLE I.E. DUE WHEREAS THE ASSESSEE HAS MADE ACTUAL PAYME NT. IN THIS BACKGROUND IT WAS SUBMITTED THAT IN ASSESSE ES CASE THE AMOUNT IN QUESTION HAS BEEN PAID SO PROVIS IONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE FOR THE REA SON THAT WAS APPLIED ONLY WHEN AMOUNT IS PAYABLE. NOTHING CONTRARY WAS BROUGHT T OUR KNOWLEDGE ON BEHALF OF T HE REVENUE. THE FACTS BEING SIMILAR SO FOLLOWING SAME REASONING WE ARE NOT INCLINED TO CONCUR WITH THE CI T(A) WHO HAS DISALLOWED THE AMOUNT OF RS. 40,000/- BY INVOKING PROVISIONS OF SECTION 40(A)(IA) BECAUSE AM OUNT WAS NOT PAYABLE BUT ALREADY PAID. 6. SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSES SEE BY THE TRIBUNAL (SMC) IN ITA NO. 1462/PN/2009 FOR A.Y. 2006-07 IN THE CASE OF PATHARE SATISH GULABRAO BY OBSERVING AS UNDER: THE LEARNED AR POINTED OUT THAT THIS ISSUE IS COV ERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF JAIPUR A BENCH OF THE TRIBUNAL IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LTD. VS. DCIT WHEREIN IT HAS BEEN HELD THAT PROVISI ONS OF SECTION 40(A)(IA) APPLY ONLY WHEN THE AMOUNT IS PAY ABLE AND NOT WHERE THE EXPENDITURE IS PAID. THE WORD PAYABLE IS NOT DEFINED BUT THE WORD PAID IS DEF INED IN SECTION 43(2) TO MEAN ACTUALLY PAID OR INCURRED. H ENCE, BY IMPLICATION THE WORD PAYABLE DOES NOT INCLUDE PAID. IN CASE, THE ASSESSEE HAD MADE ACTUAL PAYMENT, PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE. IN THE CASE BEFORE US, THE UNDISPUTED STAND OF ASSESSEE IS THAT THE EXPENDITURE IN QUESTION HAS BEEN PAID DURING TH E YEAR UNDER CONSIDERATION, SO FOLLOWING THE RATIO OF JAIPUR BENCH IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LTD . (SUPRA), WE HOLD THAT THE WORD PAYABLE DOES NOT I NCLUDE PAID AND ONCE ASSESSEE HAS ACTUALLY MADE THE PAYM ENT OF INTEREST IN QUESTION, THE PROVISIONS OF SECTION 40(A)(IA) ITA NO.516/PN/10 INAYAT ROADLINES & CO. A.Y. 2005-06 5 IS NOT APPLICABLE. ACCORDINGLY, THE DISALLOWANCE IN QUESTION IS QUASHED. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON B EHALF OF THE REVENUE. IN THE PRESENT CASE, ADMITTEDLY THE PAYMENTS HAVE ALREADY BEEN MADE TO THE OUTSIDE TRUCK OWNERS. IN THE LIGHT OF ABOVE SAID DECISIONS OF I.T.A.T. ON THE IS SUE, WE ARE OF THE OPINION THAT THE CIT WAS NOT JUSTIFIED IN INVOK ING THE PROVISIONS OF SECTION 263. UNDER THE FACTS AND CIRC UMSTANCES, WE QUASH THE ORDER PASSED BY THE CIT U/S 263 OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DAY OF OCTOBER 2010. SD/- SD/- (D.K. SRIVASTAVA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED THE 27 TH OCTOBER 2010 ANKAM COPY OF ORDER FORWARDED TO : 1. ASSESSEES 2. DEPARTMENT 3. CIT(A) I PUNE 4. CIT - I PUNE 5. ITAT, D.R. A BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE. ITA NO.516/PN/10 INAYAT ROADLINES & CO. A.Y. 2005-06 6